U.S. Treasury yields are poised for a third consecutive weekly decline after a major rally driven by a flight to safety, as investors grow concerned about the high cost of the artificial intelligence build-out.
The U.S. dollar weakened in early trading as investors braced for a series of central bank meetings, most notably the Federal Reserve, while the Chinese yuan strengthened to its highest level since 2022.
The U.S. dollar was little changed as a sell-off in technology stocks and a rout in French government bonds drove safe-haven demand for the Japanese yen and weighed on the euro.
Citigroup has identified a tactical downside risk for the EUR/USD to 1.0850, driven by widening Eurozone peripheral bond spreads and bank selling. The firm's official 0-3 month forecast remains unchanged at 1.1350.
The British pound saw a modest increase against the U.S. dollar, which held firm near its yearly highs as currency traders awaited influential September employment data from the United States.
Investor anxiety over France's projected budget deficit is pushing its 10-year bond yields to levels not seen since 2002, while a flight to safety is driving down benchmark German yields.
The Japanese yen gained after stronger-than-expected Tokyo inflation data fueled bets on further Bank of Japan rate hikes, while the U.S. dollar held steady ahead of a crucial nonfarm payrolls report.
Trade ministers from the Group of 20 nations agreed to denounce the use of food supplies as a coercive trade tool but failed to reach a consensus on addressing excess industrial capacity, according to U.S. officials. The division highlights growing tensions over global trade imbalances.
The Canadian dollar fell to multi-week lows against its U.S. counterpart, pressured by a strengthening greenback and a widening gap between U.S. and Canadian government bond yields.
